Oil inches above $48, outlook remains weak

LONDON (Reuters) - Oil edged above $48 a barrel on Wednesday, consolidating after a drop in the previous session, although traders and analysts said oversupply and the prospect of inventory rises made further weakness likely.

Prices fell by up to 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and OPEC member Iran hinted at further price weakness, saying its oil industry could withstand $25 oil.

Brent rose 70 cents to $48.69 a barrel at 0928 GMT. It hit $45.19, its lowest since March 2009, on Jan. 13. U.S. crude added 51 cents to $46.98.

"The market is consolidating between $45 and $50 and will at some point break to the downside," said Christopher Bellew, a senior oil broker at Jefferies in London, referring to Brent.

"It's not going to be until the second half of the year until we see evidence of production being cut by these low prices."

In a strategy shift, the Organization of the Petroleum Exporting Countries decided last year against cutting its supply and is betting the drop in prices will curb the growth of more costly-to-produce competing sources, such as U.S. shale oil.

The price collapse is starting to slow growth in U.S. output, according to OPEC. Still, OPEC's own forecasts still point to an increasing global surplus in 2015, which will leave an excess to be absorbed by inventories.

"We see little scope for avoiding a large stock build in the first half of 2015 and therefore anticipate weak prices," analysts at BNP Paribas said in a report.

The latest weekly snapshot of supplies in the United States, the top oil consumer, is due on Wednesday. Crude stocks are expected to rise by 2.6 million barrels, a Reuters survey of analysts showed.

Industry group the American Petroleum Institute releases its report on Wednesday. A U.S. government update follows on Thursday.

Brent fell almost 50 percent in 2014 in its biggest annual drop since 2008, pressured by weakening demand and a supply glut prompted by the U.S. shale boom and OPEC's refusal to cut output.

Russia has refused to cut production with OPEC, but Deputy Prime Minister Arkady Dvorkovich said on Wednesday that oil output may see a natural decline of as much as 1 million barrels per day (bpd).

(Reporting by Alex Lawler and Henning Gloystein in Singapore; editing by Jason Neely)